The Legislative Assembly of Alberta has passed a reading of Bill 16, also known as the Insurance Amendment Act, to include clarifications around the redomestication of captive insurance companies to and from the province.
The bill makes several amendments to the Captive Insurance Companies Act, which was introduced in Alberta in late 2021, making it the second province in Canada to permit the formation of captive insurance companies.
Bill 16 includes the definition of an “extra-provincial captive insurance company” to refer to a captive insurer existing in accordance with the laws of an extra-provincial jurisdiction.
Crucially, the bill would clarify the definition of “redomesticate” as the transfer, for the purpose of undertaking captive insurance, of an extra-provincial captive insurance company to Alberta, or alternatively a captive insurance company from Alberta to an extra-provincial jurisdiction.
Under the amended legislation, a “redomesticated captive insurance company” would refer to a captive insurance company named in a licence issued after redomesticating in accordance with the above.
A redomesticated captive insurance company is not required to merge, consolidate, transfer assets or engage in any other reorganisation. It also has the same rights, privileges, immunities and powers, and is subject to all applicable laws, duties and liabilities, of an Alberta captive insurance company.
To determine eligibility to redomesticate a captive to an extra-provincial jurisdiction, the company must file several organisational documents for the Minister’s approval, including, among others, the name, organisational form and date of formation of the redomesticating entity, proof of acceptance by the new jurisdiction, and a statement that redomestication has been approved by a vote of shareholders.
